A Random Sample of 19 Companies from the Forbes 500

question 11

Multiple Choice

A random sample of 19 companies from the Forbes 500 list was selected, and the relationship between sales (in hundreds of thousands of dollars) and profits (in hundreds of thousands of dollars) was investigated by regression. The following simple linear regression model was used: profits =  +  (sales) , where the deviations were assumed to be independent and Normally distributed, with mean 0 and standard deviation . This model was fit to the data using the method of least squares. The following results were obtained from statistical software. r² = 0.662
S = 466.2 The approximate slope of the least-squares regression line is:

• A)0.09.
• B)0.0075.
• C)-176.64.
• D)61.16.

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Definitions:

Departmental Contribution

The amount of income earned by a specific department after direct costs associated with the department have been subtracted.

Overhead

The ongoing administrative, general, and maintenance expenses incurred during the production process, not including direct labor or materials costs.

Profit Centers

Parts of an organization that are responsible for generating revenue and evaluated based on their profitability.

Return on Investment

A performance measure used to evaluate the efficiency or profitability of an investment, calculated as net profit divided by the cost of the investment.